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February 3, 2005
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Bush Hints at Social Security Cuts in State of the Union Address
Excerpt: "President Bush told Congress last night in his annual State of the Union address that 'you and I share a responsibility' to make sweeping changes to Social Security that he said might include, for those who are now younger than 55, cutting benefits and increasing the retirement age." (The Washington Times)
Audio: Wall Street Firms Cautious on Social Security
Excerpt: "President Bush's privatization plan for Social Security carries potential benefits and pitfalls for Wall Street. Private accounts could mean a windfall for investment firms and fund managers, but the financial industry remains largely silent on the issue. Mike Pesca reports." (Day to Day via National Public Radio)
Bush Administration Unveils Details of Social Security Plan
Excerpt: "The Bush administration unveiled a host of details about its proposal to add personal accounts to Social Security, but key questions remain unanswered, including how much guaranteed benefits will be cut and how the plan will be paid for. Under the proposal outlined by President Bush and his aides Wednesday, Social Security benefits would not change for retirees or wage-earners age 55 or older." (AP via The New York Times; one-time registration required)
President Introduces Private Investments to the Safety Net; Administration Official Provides Details
Excerpt: "Every American born after 1949 would be confronted with a very different Social Security system under the proposal that President Bush outlined Wednesday night. The financial safety net that the government promises the elderly, the disabled and the survivors of workers would be transformed over time from a program that uses tax money to pay guaranteed monthly benefits to one that allows workers to put part of their taxes into private investments." (The New York Times; one-time registration required)
Long-Term Analysis of the Diamond-Orszag Social Security Plan
Excerpt: "[T]he Congressional Budget Office has prepared a long-term analysis of the Social Security plan developed by Peter Diamond and Peter Orszag. The CBO analysis considers the impact that the proposed plan would have on the Social Security program, the federal budget, the U.S. economy, and present and future beneficiaries." (U.S. Congressional Budget Office)
Transcript of White House Social Security Background News Briefing on Social Security
Excerpt: "The president, [in the State of the Union speech], will be talking about the need to permanently fix Social Security. He will make clear that he's willing to lead in a bipartisan way to boldly confront the challenges of Social Security and to make the choices necessary to make sure that Social Security is there for future generations. He will spend a good deal of his remarks tonight talking about personal accounts and how personal accounts would work." (FDCH E-Media via The Washington Post; one-time registration required)
Opinion: The Harsh Reality Underlying a Proposed Change in Social Security
Excerpt: "Bernard Wasow and Martha Paskoff Welsh demonstrate how price-indexing (as proposed by the President's Commission to Strengthen Social Security) would negatively affect standards of living for retirees. They calculate how benefits today would be altered if price indexing had been introduced in past years. For example, if price indexing had been instituted beginning in 1983, they find a retiree claiming benefits at 65 today would see their annual benefit reduced from the current ...." (The Century Foundation)
Opinion: Social Security Privatization's Motherhood Penalty
Excerpt: "The earlier a person puts money into a private account, the bigger the effect on their retirement annuity. For example, $1,000 earned at age 18 adds almost twice as much to a worker's total private account than $1,000 earned at age 40. So, women face a tough choice if they reduce their earlier years in the labor force. This privatization solution prefers and subsidizes men, who are better able to enter the labor market early, and punishes women who take time-out early for child ...." (Economic Policy Institute)
Opinion: Social Security Dupery -- No Longer Good Deal for Today's Workers
Excerpt: "The liberal response to President Bush's call for Social Security reform is to argue preposterously there is nothing wrong with the current system. Try telling that to single retirees, who will on average receive a pitiful monthly benefit from the program this year of only $920." (Peter Ferrara via The Washington Times)
IRS Weighted Average Interest Rate Table Updated for February 2005
Weighted average for January 2005: 5.09% (U.S. Internal Revenue Service)
IRS Composite Corporate Bond Rate Table Updated for February 2005
Corporate Bond Weighted Average Interest Rate = 6.07 for February 2005 (U.S. Internal Revenue Service)
Overview: 401(k) Final Regs
Excerpt: "The IRS made it just under the wire. To be effective in time for the initial round of EGTRRA amendments (which are scheduled to start in 2006), the 401(k) final regulations had to be issued before January 1, 2005. For the first time in more than 10 years, the IRS issued comprehensive final regulations for 401(k) and 401(m) plans. Many items from the proposed regulations are incorporated as proposed. Many others were changed following the IRS's review of comments it received." (McKay Hochman Co.)
Overview: Automatic Rollovers of Mandatory Distributions from Retirement Plans (PDF)
2 pages. Excerpt: "This Bulletin discusses recently released guidance from the Internal Revenue Service (IRS) on automatic rollovers of mandatory distributions from retirement plans. It also summarizes related Department of Labor (DOL) guidance, released last year, that created a safe harbor to protect plan sponsors from fiduciary challenges to their choice of individual retirement accounts (IRAs) for automatic rollovers." (The Segal Company)
Law.com: Merrill Lynch Wins Workers' Suit Over Worldcom 401(k) Choices
Excerpt: "The article [at http://www.law.com/jsp/article.jsp?id=1107178533111] reports that 'Southern District of New York Judge Denise Cote, who is also presiding over WorldCom's securities class action cases, held that as a 'directed trustee' under ERISA, Merrill Lynch's fiduciary duties were limited in nature and that its decision not to block investment in WorldCom stock by the company's 401(k) participants did not amount to a breach of its fiduciary duties.'" (Attorney B. Janell Grenier via BenefitsBlog.com)
Explaining Poorly Designed 401ks: A Discussion
Excerpt: "Explaining Poorly Designed 401ks: A discussion between Fred Barstein, CEO of 401k Exchange, an online consultant to the 401k industry and Edward Siedle, President of Benchmark." (The Benchmark Companies)
Overview: Companies May Get Tax Break for Reinvesting Foreign Dividends in U.S. Pension Funds (PDF)
4 pages. Excerpt: "The IRS has issued Notice 2005-10, which provides guidance on the temporary tax incentive to repatriate foreign earnings under the American Jobs Creation Act. Importantly, the guidance explains that U.S. companies with foreign corporate subsidiaries can use the tax-favored cash dividends received from such operations to fund their U.S. pension plans." (Mellon Financial Corporation)
PBGC Now Running the Pension Plans of US Airways
Excerpt: "The federal agency that insures the pensions of 44 million workers took over the retirement plans of 51,000 current and former employees of US Airways yesterday. .... The Pension Benefit Guaranty Corporation said it assumed control of three plans covering US Airways mechanics, flight attendants, customer service agents and other workers. A bankrup.tcy court judge last month gave the airline permission to cancel its union contracts and end the programs." (Bloomberg News via The New York Times; one-time registration required)
Letter to IRS: Value of Life Insurance Contracts When Distributed from a Qualified Retirement Plan
Excerpt: "The American Society of Pension Professionals & Actuaries (ASPPA) appreciates the opportunity to provide further comment on the Internal Revenue Code (IRC) Section 412(i) guidance proposed by the IRS and the Treasury on February 13, 2004 (Proposed Regulations). ASPPA provided initial comments to the IRS and the Treasury on May 17, 2004. This letter is intended to augment some of the previously provided comments in regard to certain technical issues." (American Society of Pension Professionals & Actuaries)
ASPPA Comments on Proposed Regs on Distributions from a Pension Plan Under a Phased Retirement Program
Excerpt: "ASPPA's comments are set forth in two separate documents. This document (Part 1) addresses proposed rules governing selection of a normal retirement age. A separate forthcoming document (Part 2) will address aspects of the proposed regulations other than those governing selection of a normal retirement age." (American Society of Pension Professionals & Actuaries)
An Overview of Public Employee Pension Plan Domestic Relations Orders
Excerpt: "Over the years, most public plan providers have had to change their rules (either in response to legislation or case law) to permit the acceptance of domestic relations orders and allow for distribution to ex-spouses and/or dependent children. Because their rule changes were not based on a single piece of legislation, each public plan was free to establish their own procedures and guidelines. This has resulted in a hodgepodge of procedural provisions from plan to plan." (Divorce, Pensions and Retirement Benefits)
Correction: RMD Distribution Period Following Death of the Participant
Excerpt: "NOTE: This article is an update of an article published on January 21, 2005. There was an error in the first sentence of paragraph two, wherein it stated that 'If a participant dies on or after his/her RBD....' This has been corrected to state 'If a participant dies before his/her RBD...' The article has been further updated to provide additional clarification on certain items." (SunGard Corbel)
Overview: Automatic Rollover Guidance for Involuntary Cash Outs of Eligible Rollover Distributions
Excerpt: "With the recent issuance of IRS Notice 2005-5, the new automatic rollover requirements that apply to involuntary cash outs of eligible rollover distributions of $1,000 or more go into effect on March 28, 2005. Qualified retirement plans, 403(b) arrangements subject to Title I of ERISA, government-sponsored plans (including 457(b) plans), and church plans, which mandate mandatory distributions, will be required to comply with these new rules." (McKay Hochman Co.)
California Pension Plan, CalPERS Faces National Fight with Democrats
Excerpt: "Democratic officials from five states launched a nationwide campaign Wednesday to fight Gov. Arnold Schwarzenegger's plan to privatize California's public pension systems. California Treasurer Phil Angelides, who is leading the effort, called the Republican governor's proposal a major assault on the movement to reform corporate America following a wave of scandals." (AP via The Washington Post; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Survey Shows More Firms Offer Partner Benefits
Excerpt: "More U.S. companies have started to offer benefit coverage for same-sex couples and other 'nontraditional' families, according to a new survey. The Nontraditional Family Benefit Coverage Survey, conducted by Mellon Financial Corp. Human Resources & Investor Solutions business, found that 31 percent of responding companies offer domestic partner benefit coverage, up from 19 percent in a 2001 survey." (Reuters via Yahoo! News)
Perspective: Outlook for Executive Compensation Governance 2005: A Plan of Action from Mercer
Excerpt: "This Perspective sets out ten steps, based on our experience with companies across the country, that we believe will strengthen executive compensation governance in 2005. At the end of the article, we include a checklist for compensation committees of 'must-do' items for the first quarter of 2005." (Mercer Human Resource Consulting)
Summary: Recent Legislative, Regulatory, and Judicial Information on Employee Benefits for Jan. 2005 (PDF)
2 pages. Excerpt: "The February 2005 issue of Monthly Benefit News and Development covers: the status of federal legislation affecting employer-provided health and retirement benefits; new tax options developed by the Joint Committee on Taxation; upcoming key dates; IRS and CMS regulatory guidance; BLS's study on factors contributing to saving for retirement; and the GAO's recommendations for legislation to protect the PBGC." (Milliman)
Newly Posted Events
Communication With Employees in the Modern Era:
in Georgia on February 17, 2005
presented by Worldwide Employee Benefits Network (WEB) - Atlanta Chapter
International Pension and Employee Benefits Lawyers Association -- IPEBLA 10th International Conference, Vienna, Austria
Nationwide on May 22, 2005
presented by International Pension & Employee Benefits Lawyers Association
Newly Posted Press Releases
PBGC Takes $2.3 Billion Pension Loss From US Airways
(Pension Benefit Guaranty Corporation (PBGC))
Labor Department Proposes Funding Notices for Multiemployer Plans
(U.S. Department of Labor, Office of Public Affairs, Washington, D.C.)
California Employers View Health Care Cost-Sharing as Double-Edged Sword; Employers Believe Cost Sharing Encourages Workers to Spend Wisely, but May Result in Foregoing Needed Care
(California HealthCare Foundation (CHCF))
OnlineBenefits Introduces AgencyWare - Agency Management System Added to Benefit Broker Product Line
(OnlineBenefits, Inc.)
Newly Posted or Renewed Job Openings
Pension Analyst
for Long Island Employee Benefits Group, Ltd.
in NY
Document and Compliance Specialist
for Alliance Benefit Group
in KS
Pension Administrator
for VPC Group
in VA
Deferred Compensation Analyst
for Employees Retirement System of Texas
in TX
Executive Compensation Administrator
for Multi-faceted Privately Held Financial Services Company
in GA
Supervisory Pension Law Specialist
for U.S. Department of Labor, Employee Benefits Security Administration
in DC
Supervisory Investigator (Deputy Regional Director)
for U.S. Department of Labor, Employee Benefits Security Administration
in MO
Retirement Services Major Accounts District Manager (Sales)
for ADP Retirement Services
in CA, NJ, PA, TN
Administrative Assistant
for Small Chicago law firm and TPA firm
in IL
DC/401(k) Administrator
for The Parker Group
in NY
Handy Links:
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- Search BenefitsLink
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
Copyright 2005 BenefitsLink.com, Inc.; except that you may reprint this newsletter in full (including this sentence) without obtaining our permission.
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